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loan by company to a charity

Tax consequences of company making a loan to a charity

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can anybody please explain the tax consequences of a company having surplus funds making an interest free loan to an unconnected uk registered charity

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17th Feb 2019 02:19

You'd be best discussing this with an accountant.

You will also need a solicitor to ensure an appropriate loan agreement is in place.

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17th Feb 2019 13:40

I would expect the interest that is waived should be calculated and treated as a donation. Try looking up rules around services given to charities FOC, these have to be accounted for as if they have been paid for but then offset by a donation to the charity. The charity should also show this as a donation received. Hope this points you in the right direction.

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to Westbookkeeping
17th Feb 2019 14:28

Westbookkeeping wrote:

I would expect the interest that is waived should be calculated and treated as a donation.

Really? Could you point me to the source for that? Ta

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to Westbookkeeping
17th Feb 2019 14:46

Thank you Westbookkeeping for your response. The reason for my initial enquiry was because I could not find any legislation that deals with the tax con sequences and/or permissibility of private companies making loans to charities. The loan will be repayable and it does make senses to calculate the ‘interest’ as a qualifying donation in the ct return.

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17th Feb 2019 14:54

I would further add that the company is not interested in obtaining a tax relief, as long as it is legal and also does involve any ‘tax’ charge in the company.

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17th Feb 2019 17:33

info-AT-cbsaccountants.net wrote:

Thank you Westbookkeeping for your response. The reason for my initial enquiry was because I could not find any legislation that deals with the tax con sequences and/or permissibility of private companies making loans to charities. The loan will be repayable and it does make senses to calculate the ‘interest’ as a qualifying donation in the ct return.

Just checking - will you treat this mythical interest as income too ?

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to lionofludesch
17th Feb 2019 23:59

Donations have to be paid in cash to be eligible for corporate tax gift aid, so a notional 'unpaid interest charge wouldn't have any effect

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to WhichTyler
18th Feb 2019 09:17

Agree - it's a pointless complication.

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